The Commerce Department said the economy expanded at an annual rate of 2.2 percent in the January to March quarter, slower than the 3 percent gain in the last three months of 2011. Consumer spending, however, was at its fastest pace in more than a year.

The slowdown was predicted by economists, who also forecast that economic growth will accelerate as the year goes continues, and eventually outpace last year. In 2011, the economy grew just 1.7 percent. Growth is expected to accelerate to around 3 percent for all of 2012 as stronger job growth spurs increased consumer spending.

In Europe, market gains were also subdued after S&P downgraded Spain's debt a second time, and that nation reported another increase in its already staggering unemployment rate. Spain's economic problems have taken the spotlight in recent weeks.

Procter & Gamble Co., shares were declining after the consumer products giant reported a 16 percent profit slump for the first three months of the year, hit by higher costs for raw materials and restructuring charges.